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One man's island: is David Murdock's resort development on Lanai a monument to his ego?

Ron McOber, a founder of the grass-roots group Lanaians for Sensible Growth, was walking across a parking lot in Lanai City one day early this year, when Castle & Cooke CEO David Murdock happened to pedal by on a bicycle. There is no love lost between McOmber and Murdock, the architect of Lanai's transformation from Pineapple Island into a refuge for the extremely well-heeled. But on this day, according to McOmber, Murdock was in a mood to chat. "Have you been up to my new hotel?" the CEO called out, curious about McOmber's reaction to the Lodge at Koele, the year-old, 102-room luxury property on Lanai. "Yes," McOmber replied, warily. "What do you think of it?" asked Murdock. "It doesn't belong on Lanai," replied McOmber, and kept walking.

But his conversation with Murdock didn't end there. A few minutes later, McOmber saw Murdock pedaling toward him again. Thinking quickly, McOmber stepped into the CEO's path and Murdock came to a stop. "I decided I was going to confront him," says McOmber. "I thought I'd tell him, once and for all, what I've been saying in the news media and at all these public hearings." As Murdock stood astride his bicycle, McOmber gave the CEO an eartful. "The more we got into it, the louder I got," recalls McOmber. "We never did come to any agreement. He said, 'Maybe the next time I'm here, we ought to sit down and talk about this." And I said, "There's really nothing to talk about. You have your ideas of what Lanai is supposed to be, and I have mine. And believe me, they're too far apart." And that was the end of it. I walked away, and he rode away--on his little bicycle."

McOmber is not the only resident frustrated by the changes David Murdock has wrought on Lanai, the tiny island eight miles from Lahaina that is 98 percent owned by Castle & Cooke. With the construction of the Lodge and the 250-room Manele Bay Hotel, and the planned elimination of pineapple production by Castle & Cooke subsidiary Dole Co., Lanai is in the midst of a wrenching traasformation. As the island moves from an agrarian to a resort economy, residents are watching the changes with a peculiar mixture of sorrow, anticipation and alarm.

Murdock's surprise announcement last September that he would end pineapple production on the island by 1993 came as a distinct shock. Most residents had expected a more gradual phase-out of what has been Lanai's sole industry since pineapple king James Dole bought the 234-square-mile island for $1 million in 1922 to use as a giant plantation. Many Lanaians agree that the hotels will provide better jobs for residents than plantation work, (see Business Ink, page 10), and may even act as lures to entice back the island's young people, most of whom have left in search of better opportunities.

But Lanai residents also worry that the arrival of tourism will signal the death of the island they know and love: a close-knit community of 2,300 people where doors are routinely left unloccked, drivers wave at each other on the narrow two-lane roads, and neighbors become as close as family members. "There's a sense of community here that you don't get anywhere else," says Martha Evans, a teacher and native Hawaiian who grew up on Oahu, moved to Lanai in 1976 for a teaching job, then married and decided to stay. "The people are not false here. They give from their hearts."

In the past, that kind-heartedness may have contributed to the reluctance of Lanaians to take a forceful stand on issues affecting them. "The community itself has not been strong. We haven't been very vocal," admits Kay Okamoto, co-chair of Decisions Lanai, a group that monitors the social services needs of the island and lobbies county and state officials for assistance. But there is mounting evidence that, faced with a force as great as David Murdock, Lanaians are finding a common voice. "He thinks this is his island and his people," says Evans, the current president of Lanaians for Sensible Growth. "But we're trying to look at empowerment of the people, so we can have some control over what's happening here."

Building up Lanai. Castle & Cooke's development plans for the island are extensive: the two hotels, a separate 18-hole golf course for each, tennis courts and a riding stable, and the construction of 575 single-family and 200 multi-family luxury-housing properties. According to officials from both Castle & Cooke and Rockresorts, operator of the hotels, Lanai will become a unique "island experience," with each hotel complementing the other and the entire island available for guests to enjoy.

Company officials closely guard development costs, but Castle & Cooke's 1989 annual report notes that as of December 30, 1989, approximately $143 million had been invested in the project, with the maximum net investment "at any one time" in the first four phases of the project expected to be some $370 million. Press materials from Rockresorts peg the price tag for the two hotel properties alone at more than $260 million. Development of the entire project will take 10 to 15 years, according to Thomas Leppert, president and CEO of Castle & Cooke Properties' Hawaii division, although officials expect that the Manele Bay Hotel and the Lodge golf course will be ready for guests this month. The Lodge at Koele officially opened in April 1990.

Castle & Cooke and Rockeresorts officials agree that if Lanai has to become a resort destination, the new properties are among the best the island could have. "Once you decide that you're going to be a resort, you couldn't ask for two better profile hotels than these," says George Lidicker, managing director and vice president of Rockresorts Lanai. "You're not talking about bringing (developer Chris) Hemmeter in with an 800-room property--a Kauai Lagoons with gondolas. These are non-tour-group hotels, that cater to high-end independent travelers. They employ the most amount of people with the least amount of impact on infrastructure. I know it's hard for the community because they can't compare, but imagine what a Holiday Inn or a Hemmeter property would do to this island. It would be a sin."

Nonetheless, no one disputes that the resort development will have a profound effect on Lanai. Lidicker estimates that, in a successful year, the two hotels will bring an additional 40,000 to 60,000 people annually to an island whose only previous guest quarters had been the 10-room Hotel Lanai and a few bed-and-breakfasts. In addition, the luxury homes are expected to raise the number of long-term and permanent residents to approximately 6,000, drastically altering the socio-economic composition of the island by creating a new class of wealthy residents.

Rockresorts officials say that, along with the limited number of rooms, the high price of enjoying the Castle & Cooke properties will act as a natural barrier to ensure that the island is not overrun by hordes of unruly tourists. A night at the Lodge can run anywhere from $275 to $900; daily room rates at the Manele Bay Hotel currently range from $295 to $405, with suites starting at $500. Should a visitor become so enchanted with Lanai that he or she wants to purchase a home there. Castle & Cooke is offering its luxury properties at prices that start at "several hundred thousand dollars" each, according to Leppert.

It is the company's emphasis on catering to the well-to-do that particularly disturbs some Lanaians--several of whom said they were not unilaterally opposed to resort development. "Lanai has become a dream island--a place for the rich and famous. It's something that the common person could never afford," says Evans. "That's totally wrong, because it gives people an entirely different perception of what life is like here."

Goro Hokama also takes a dim view of the high price of the Lanai visitor experience. Hokama, a department clerk with Dole who has been with the company since 1946, might be expected to be hesitant about critizing his employer. But Hokama has somewhat more power than the average Dole employee. He is the division representative and unit chairman for the International Longshoremen's and Warehousemen's Union, which represents both Lanai pineapple workers and employees at the hotels. He is also in his 37th year as the Lanai representative to the Maui Country Council.

Hokama originally backed Castle & Cooke's plans to bring resort development to Lanai, believing that tourism would bring much-needed diversification to its economy. But he says he has been disappointed in the results. Especially because ending pineapple production means Lanai's economu is again based on only one industry--in this case, tourism. "I always felt that we would go into the resort business, but not the way it is being done now," says Hokama. "My feeling about Koele was that it would be a more ranch-style resort, with a more Hawaiian type of setting." As the Lodge is now, says Hokama, "I think Murdock had a picture of New England, and he's trying to put it on Lanai." (The company's annual report, in fact, describes the property as having "the charm and refined atmosphere of a traditional English country manor.")

But Hokama and other Lanai residents object even more strongly to the luxury housing that Castle & Cooke is preparing--for reasons Hokama believes are completely lost on Murdock. "People have to understand that the impact of the old plantation days hasn't really worn off," says Hokama. "Back then, the supervisory bracket--the small, affluent group of the plantation community--used to live on what we called Snob Hill. They had the better homes, and there was a distinct line as to where people lived, because of their class. Those were the houses of the superintendents, and the workers could not even go up that road."

Hokama admits that a certain percentage of upscale housing is necessary for Castle & Cooke's development plans to succeed: The housing is, as Rockresorts' Lidicker puts it, "the engine for the project--without the houses, it wouldn't be economically feasible for the hotels to be here." Nonetheless, says Hokama, the developers are looking at the luxury homes "strictly from the economic standpoint--how much money they can make. But they forget that people have a history here, and don't want to go back to those days when the lines were drawn: "These are the rich and affluent, and you are the poor workers."

Chairman Murdock. Several Lanai residents say that what troubles them most about Castle & Cooke's development of their island is the manner in which it has been carried out. "It's not so much that people are against resort development, but it's the way the development took place," says Hokama. He cites in particular the decision to open two hotels a little more than a year apart, at the same time that pineapple production was all but eliminated. "I don't think the phasing out of pineapple and moving the pineapple workers to these (hotel) jobs was planned by Castle & Cooke well enough to minimize the confusion and fear of the workers," says Hokama. "People could have accepted and adjusted to the total project, and they wouldn't have been concerned that there was too much change--$Iif$N the hotels had been built one at a time. But the shock of it--such a big change at the beginning of this development--really had a negative impact."

When fingers of blame are pointed, they inevitably go in one direction: to David Murdock, the wealthy, silver-haired California businessman who took over as chairman of Castle & Cooke in 1985 and rescued the venerable Big Five firm from the brink of bankruptcy. White knight Murdock appears to have few supporters among the citizenry of Lanai: He has been described as "an arrogant, very rich, spoiled old man," as "an egotistical maniac," and as "a child who's got to have his way." Says McOmber, "David Murdock is a land developer. He doesn't care about Lanai, and he doesn't care about those hotels. He's going to develop expensive home sites and make back the millions that he spent on the hotels. But it's not right for this man to change the lifestyle of this island, and do what he's doing to this rural place, without paying some dues for it."

Several Lanaians contend that the greatest shortcoming of C&C officials has been their failure to communicate with residents and include them in the planning process. McOmber notes that company officials set themselves up for a protracted battle with residents early in 1987, when they submitted a proposal to Maui County officials involving the use of Hulopoe Beach Park. The park, located on Castle & Cooke property next to the Manele Bay Hotel site, has the island's largest white sand beach and is a favorite recreation spot. The company's proposal would have restricted beach use by residents and allowed closing of certain areas of the park for hotel functions--a possibility that outraged the citizenry.

In response, McOmber, Evans and several others formed the now 250-member Lanaians for Sensible Growth. With the assistance of the Office of Hawaiian Affairs and the county planning commission, they reached a November 1987 agreement with Castle & Cooke that ensured public access to the beach. In spite of some skirmishes, the uneasy truce lasted until January 1990, when the company surprised residents by applying to the state Land Use Commission for permission to build a golf course adjacent to the Manele Bay Hotel site. The proposed course called for more than doubling the size of the 410-acre Manele Bay project district by reclassifying an additional 458 rural and agricultural acres to urban use. At the time, Leppert testified that without a golf course, neither the hotel nor the planned upscale housing development at Manele could succeed financially.

Lanaians for Sensible Growth at first opposed the expansion, requesting that the company do an environmental impact statement before developing the golf course. Hearings dragged on through the summer, with the matter still unresolved after an LUC hearing in August. But one week later, Murdock announced that he was phasing out pineapple production on Lanai, and ILWU officials on Lanai began to voice concerns that opposition to the golf course could jeopardize the incomes of former plantation workers counting on jobs at the new resort. "We were stuck, because people's livelihoods depended on that resort, whereas they hadn't before when there was pineapple on the island," says Evans.

After a series of difficult negotiations, the group reached a November 1990 agreement: Lanaians for Sensible Growth would not oppose the golf course and Castle & Cooke would commission an environmental impact statement before building adjacent housing. The agreement also provided for continued public pedestrian access to the cliff coastline property near the golf course, and for the creation--with $170,000 in company seed money--of a community development corporation to help residents start businesses.

Murdock said he was ending Lanai pineapple production because Hawaii labor costs were much higher than those in other pineapple-producing areas worldwide. But Evens thinks the CEO's real motivation was far different. "I believe Mr. Murdock made the announcement because it took care of several problems that he had," she says. By shutting down the pineapple plantation, she notes, Murdock no longer had to respond to repeated questions about the adequacy of the island's water supply for pineapple, residential and resort use. He also eliminated county governmental concerns about housing for new resort employees, since the displaced pineapple workers gave him a ready labor supply. Finally, she suggests, by removing the only other source of employment on the island, he effectively snuffed out community opposition to the golf course project.

Keeping the gloves on. David Murdock is not known for being accessible to the press; in March, a spokeswoman said he was too busy for either an interview or to respond to written questions about his projects. But Leppert staunchly defends his boss. "Look at the results," he says in reply to a question about Murdock's abrasive personality. "The gentleman has been successful all his life. He has truly created value."

Leppert acknowledges that Murdock's vision of Lanai means changes for the community. But, he adds, "If you look at the things we're doing, I think there's a real effort to try to minimize (those changes) or, when there are changes taking place, to make sure that they're for the benefit of the community in total as well as for Castle & Cooke." Among the contributions the company has made to the island, notes Leppert, are $50 million worth of affordable housing, a $5-million water system for Lanai City, a $3-million recreation center for residents, and the funding for the community development corporation. Perhaps most significant, says Leppert, are the job opportunities the new resorts have brought. "If we didn't have those properties, you'd be looking at significant unemployment," says Leppert.

Leppert admits that communication with Lanaians has been "an issue" in the past, but believes that Castle & Cooke officials have made significant improvements in talking with residents, noting that he and others have spent long hours meeting with community groups to explain development plans. As for Murdock, says Leppert, "He is genuinely interested--not just in the island but in the people of the island. He is clearly contributing to the community. I think there's a point at which you have to look at the facts."

Much of the debate on Lanai, however, has centered not on facts but on inferences--the conclusions residents draw from the statements and actions of company officials. There has been much speculation of late that Murdock is sprucing up the tiny island so he can sell it and reap a handsome profit. That scenario makes some residents anxious, but Goro Hokama is not one of them. "A new buyer doesn't automatically mean that you're going from bad to worse," says Hokama. "You might have a new buyer who's more compassionate. It might be an improvement."

Whether the landlord is Castle & Cooke or a newcomer, any owner of Lanai should be prepared to reckon with the island's residents, who are determined to make the point that they have certain rights. Working as individuals, in groups, and with government officials, they are committed to monitoring development on the island. "As far as I'm concerned--as far as the union goes, and as long as I have anything to do with government--whether it's Mr. Murdock or a new buyer, I'm not going to stand by and let them do what they want," says Hokama. "To Murdock, everything is a margin of profit. And in Lanai's case, besides making money, I think--to put it bluntly--that he's trying to build a monument to himself."

Some residents of Lanai have suggested that if the island changes too much, they will consider moving. But Martha Evans is not going anywhere. In explaining why, she touches on something that David Murdock may not have anticipated when he launched his redevelopment of Lanai--the depth of feeling its residents have for their home. "Our roots are here," says Evans. "This is home. That's one of the reasons I've gotten so involved, because I want Lanai to be a place my children will remember. It gets really tiring, but I want to be able to tell them that I tried my best."
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Title Annotation:Rockresorts Inc. changes Lanai community
Author:Hooper, Susan
Publication:Hawaii Business
Date:May 1, 1991
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